Life Insurance In The USA Heading For An All Time Low?

According to the Life Insurance and Market Research Association, last year only 44 percent of U.S. households had individual life insurance, and 30 percent of U.S. households had no coverage at all.

This is obviously a well funded research association with statistics that can’t be easily dismissed so how do these figures compare with previous years?  I’ll be there is quite a difference.  In these turbulent times it is well known that when the going gets tough, polices get cancelled.  At the same time it is also worth knowing that these policies were cancelled in a very stressful time.  People could literally not afford to make payments each month and had to save money wherever they could.  To make matters worse there are some in the medical industry that will say that stress brings on illness and causes death which is precisely the time that these policies are needed.  Talk about the worst of both worlds.

Dread Disease And Critical Illness Insurance

When critical illness insurance was first launced in South Africa it was also known as ‘dread disease’ due to the life threatening natures of the illnesses that were covered these being heart attack, cancer, stroke and coronary artery bye-pass surgery.  There were only four illnesses covered under a dread disease contract in the early days of critical illness insurance.  As the product grew it went on to add more illnesses.  Today the Association of British Insurers have 22 standard illnesses but most insurance companies not only adopt these but also add their own illnesses too.  For instance, BUPA have a further 16 illnesses taking their total to 38 illnesses covered on their critical illness policy.

The term dread disease is not used very often now.  It became critical illness mainly due to the increasesed amount of illnesses covered.  Critical illness is the widely used name now although it is still also known as serious illness insurance, crisis cash and living assurance.

A Welcome Drop In Cancer Death Rates

The American Cancer Society has revealed that cancer death rates in the USA dropped by 19.2% for men and 11.4% for women over a 15 year period between 1990 and 2005.

The male death reductions were mainly due to decreases to lung, prostate and colon cancer deaths whereas the women’s death rate drop was mainly due to breast cancer and colorectal cancer. These death rate decreases are a result of better treatment and prevention. Obviously cancer was still diagnosed in each case but it was treated and lives were saved.

This is good news in the on-going war with cancer. We all know that medical science and treatment gets more advanced as each year goes by but it is good to actually see some figures to show just how much better treatment is. Even so, more than 1500 people in the USA will have died each day in 2009 from cancer so there is still a huge amount of work to be done.

With critical illness claims settlement history on the up this can only mean that more and more people will realise the benefits of critical illness and buy cover. Over 1.5 million people are diagnosed with cancer each year in the USA alone so if more of those people had critical illness insurance how many more lives could be saved? There is no doubt that having a lump sum of money can buy better treatment and get that treatment quicker too. Not all cancer treatments are available of national health care plans so if your life depended on it surely it would be worth paying for?

There have never been figures published showing the exact financial impact on families during a cancer or critical illness diagnosis. Of those 1500 people who die each day in the USA how many had critical illness cover and just how much of a difference did it make to the family finances? Of those who didn’t have cover how many faced losing their homes while they were still in hospital because they couldn’t pay their mortgage and household bills?

Critical illness cover is here to stay and as long as critical illness sales continue to rise and cancer death rates continue to fall then everyone will be far better off.

 

Illness Insurance

‘Illness Insurance’ is a regular internet search term but what are people looking for when they type this search term in?  People who know about critical illness insurance tend to use that search term whereas those who are aware of income protection will enter the term ‘income protection’ or ‘permanent health insurance.’

Illness insurance can be anything between critical illness, income protection or mortgage payment protection insurance.  The fact is that further questions need to be asked.  If someone wants illness insurance how long do they want cover for?  What kind of benefit are they seeking?  What is the purpose of cover?  The only chance someone has of entering in the search term ‘illness insurance’ is if they find a site that clearly explains the various options available to them, so here goes:-

Critical Illness Insurance

Critical illness insurance is lump sum benefit (also known as dread disease and CIC) designed to pay out on diagnosis of a specified disease or illness.  More often than not people arrange critical illness policies using term assurances where the benefit is set for a specific term.

Mortgage Payment Protection Insurance  

Mortgage payment protection insurance is designed to pay your monthly mortgage amount plus associated costs for a limited term (usually 12 or 24 months) if you are made redundant or you suffer an accident or illness.  Policies can be set up to cover accident/ illness or redundancy or both.  There is no medical underwriting with this type of policy.

Income Protection

Income protection insurance is one of the most flexible types of insurance available.  Any accident or illness is covered (subject to a few exclusions such as self inflicted injury) and you can arrange for a replacement income to be paid to you after a deferred period.  The benefit can be paid until you return to work, retire if you are unable to work, or if you die before the end of the term.  Usually the maximum you can insure your salary for is around 60% of your current gross pay but benefits are paid tax free (under current tax laws).

Hopefully ‘illness insurance’ might now lead someone to finding the product that matches their needs a little better.

Critical Illness Cover Is It Worth It?

The term ‘critical illness cover is it worth it’ has 3,480,ooo competing pages on Google so clearly there is some debate as to whether or not it really is worth it. 

Critical Illness Insurance is still a relatively new type of insurance and was first introduced in South Africa in 1983.  The founder was Dr Marius Barnard.  It is interesting that it was a doctor who saw the benefits of a policy that would pay out lump sums to people diagnosed with life threatening illnesses rather than an insurance company.  Dr Marius obviously saw first hand just how devastating a critical illness could be not only physically and emotionally but also financially.

Since its launch many life assurance companies have launched their own critical illness policies but to be fair these did vary in the early days with the illnesses that they covered.  The Association of British Insurers helped matters by putting together a standard list of illness and the insurance definition of the illnesses covered so that both life assurance companies and their customers could easily see just what the definition of a particular illness was.

Because there was early confusion as to what the definition of an illness was, critical illness claims settlement history was erratic.  Also, because this policy was based on medical history there were a high number of claims rejected based on non-disclosure where customers had not declared previous medical conditions that might have affected the underwriting of the policy.  Thanks to the ABI definitions and the adviser community educating customers both the claims settlement history has increased year on year and the non-disclosure rejections have decreased at the same time.  It is always better to declare everything so that an underwriter has a complete picture to base cover on.

Each year life insurance companies release their claims settlement history in an effort to be transparent.  They publish the amount of claims they have successfully paid out on, the total amounts, the average claim size, average age of claimant but more importantly they publish data on the amount of unsuccessful claims.  The unsuccessful claims are a result of non-disclosure or the illness not meeting the required definition.  According to Moneyfacts insurers paid out an average of 90.8% of all claims last year.  This is an average across the insurance companies so some did better than others.  Legal & General paid out 93.6%.

Enter the term critical illness payouts into Google and you won’t have to go far before your are reading horror stories about life insurance companies not paying, or articles telling you that policies rarely pay out.  These types of stories will always be there because they are true.  The life assurance companies have already told us about the claims they rejected and why.  Some of those rejects will be justified but some will have a case to argue and where better than the internet?

The simple fact of the matter is that critical illness policies are designed to pay out when you need them most, when you are diagnosed with an illness that is so threatening that it changes your life permanently in most cases.  A lot of people who have claimed on their critical illness policies do not return to their normal occupation yet they still have homes and bills to pay so a lump sum benefit can be very welcome.  One of the reasons people decline critical illness is the cost.  If cancer research tell us that we still have a 1 in 3 chance of being diagnosed with some form of cancer during our lifetime then that is something worth insuring against.  It is clearly going to cost more than life assurance.

So is critical illness cover worth it?  There is no definitive answer to this question.  Policies not being paid out is no longer an excuse for people to decline cover.  There will always be people who are worried enough about their homes and lifestyles to bet against a 1 in 3 statistic and then there will be those prefer to take their chances.  Which one are you?

Critical Illness Insurance – sold but not bought

Critical Illness Insurance has been seen as a product that is ‘sold’ by advisers rather than ‘bought’ by consumers.  If this is the case then it explains why there are so many people out there with no cover whatsoever yet they still have families to support and mortgages to pay for.

Ask any one in the street if they would accept free critical illness cover and just about everyone (I’m guessing here) would say yes so there is clearly value in the product as far as consumers are concerned. So what stops people from just going out and buying cover for themselves?  Could it be that they don’t want to have to visit a financial adviser who will then tell them that they should consider other products too?  Could it be that the product is complicated and they haven’t the time or inclination to find out what is the best product for their needs?  The answer is probably both.

The internet is changing this though.  It is now possible to find out more information about critical illness policies and what is offered.  It is possible to get free online quotes too through websites like this.  However, anyone wishing to purchase critical illness insurance should be able to do it easily and correctly so advice is something that should be considered before you buy.  The more specialist websites such as this there are in the future, the more people will be inclined to just buy cover of their own accord without being ‘sold’ it.  This in turn will make critical illness cover a more polular product and sales will increase.

How Much Does Life And Critical Illness Cost?

It is all very well talking about the endless benefits of critical illness insurance but what does it actually cost?  To a lot of people having life assurance is something worth considering if they have a mortgage or family or both but adding critical illness to the equation often gets a rejection on the basis of cost.  If you stand a 1 in 3 chance of being diagnosed with cancer at some stage in your life it WILL cost to insure against it!

Below are two illustrations, the first showing likely monthly premiums based on non-smokers accepted on standard terms for life insurance only over a 25 year level term assurance with a sum assured of £100 000.  The quotes are based on occupation category 1 and are valid at the time of publication.

Age Male Female
20 £5.10 £5.00
25 £5.21 £5.00
30 £6.00 £5.25
35 £7.88 £6.35
40 £11.37 £9.13
45 £17.45 £13.69
50 £28.73 £22.11

Life and critical illness quotes are as follows:-

Age Male Female
20 £12.12 £11.66
25 £15.25 £15.04
30 £20.32 £20.59
35 £30.61 £29.45
40 £47.77 £43.80
45 £80.93 £68.14
50 £126.44 £103.05

Both sets of quotations include our 50% commission rebate which lowers your premiums.

As you can see, critical illness cover, for all of its benefits does not actually cost that much on a month to month basis when you consider that a cup of coffee is often more than £2.00.

If you have been thinking about critical illness cover do not delay, request a personalised quotation today by clicking here.

The Best Critical Illness Policy In The World

Critical illness policies vary so much from provider to provider and across continents.  A standard critical illness policy in the UK can be very different from an American policy. 

The life insurance industry has always been one where products are offered and you pay a set premium for them depending on your age and state of health.  Have life insurance companies moved with the times though?  Should they be asking what people actually want?  If someone simply wants a policy to cover cancer why can’t they have this policy?  Why do they have to pay for 30 other critical illness definitions they are not interested in?  No wonder critical illness can be a hard sell. 

Maybe life insurance companies need to change the way they offer products.  They have the statistics so why not just offer a menu driven approach so that customers can pay for what they want?  Why can’t someone have a policy that covers them for cancer, stroke and parkinsons disease?  If one life assurance company offered this kind of menu driven approach how much extra business could they pick up just by listening to their customers?

No life assurance company in the world can design the best critical illness policy.  That kind of policy can only be designed by those who will be paying for it so what would you want in your policy?  What ideas could you pass on to make a better policy worth having?  Please leave comments so that we can see how far this could go.

The American Attitude To Life Insurance

Life insurance in the UK is seen as a drag.  No one gets excited about it, few people really give it much thought and the general thought is that if it is worth having then get it done and move on.  There are still so many people in the UK who will quite happily spend 4 times their joint income on a mortgage knowing that the budget will be tight for the next few years who then think that life insurances just aren’t worth it.

  Buying a house is a massive gamble.  Without any insurances such as life insurance or mortgage protection you have to hope that over the next 25 years you will not die, you will not suffer a long term illness, you will not be made redundant and you will not be diagnosed with a critical illness.  25 years is a long time and at least one of these events could easily happen so insurances should be part of the mortgage budget, not an additional extra.  Without the insurance option you risk losing your home.  Who wants that?

The British attitude to insurance is wrong.  Ok, which ever way you look at it insurance is a lose lose situation.  If you do have to claim on your policy it’s because someone has suffered.  If you never claim on your policy you’ve paid all of those premiums but never seen any benefit.  Life insurances and mortgage protection should be seen as a back up plan, something to be proud of, something to show just how organized you are in your home ownership plan.

The American attitude to life insurances is very different.  Americans seem to take pride in their life insurance plans.  Life insurance is something they worry about.  They want to make sure that the back up plan is there should it ben needed.  Most of all Americans seem to be proud of their planning and talk about ensuring that their life insurance is up to date.

Could I be wrong on this?   Please leave comments.

Yasmina Won The Apprentice Final 2009

Yasmina won and for once I correctly predicted this and wrote about it a few weeks ago.  Does this mean that I might have the kind of business gut feeling that Sir Alan is looking for?

She seemed the be the best candidate in my opinion and should do well.  It’s a shame in these programmes that we rarely get to see what they end up doing.  Sir Alan said that she would be on the digital division providing screens to hospitals and surgeries.  To me this sounds like she will be selling advertising space.

I also wonder how the filming process is done.  Surely it can’t be filmed over a 12 week basis as the contestants would spend most of the time sitting around in the penthouse waiting for the next challenge.  Maybe it is filmed over a 3 week basis and the challenges are filmed back to back to keep the pressure on?